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Last week the UK financial service regulator and supervisor, the Financial Services Authority (FSA), issued a discussion document which investigated the future of the listing regime for companies traded on UK markets.
The UK markets have continued to successfully attract business and remain a strong component of the UK’s economic performance. Much of this stems from the attractiveness of London as a venue for corporate flotations, secondary listing and market liquidity. The way that London accepts new company shares onto its trading environment (the Listing Regime) plays a key part in this success demonstrated by London’s leading position for global IPOs and the increasing number of overseas issuers.
Currently there are two levels of listing. Primary Listing which is at a higher level of requirements than current European Union demands; and Secondary Listing which matches the minimum EU requirements. UK companies must take a Primary Listing but that is not necessary for overseas companies. That has created criticism that corporate governance and disclosure at some overseas companies has not been up to the standard preferred, and that the regime may discriminate against UK companies.
The FSA paper poses a number of questions – should the Primary Listing be retained? Should it be retained and the Secondary Listing downgraded so that it cannot claim to be a “London Listing”? Should both be retained but classified as Tier 1 and Tier 2 listings with UK companies permitted to take out a Tier 2 status?
Comments are asked for by April 14th with feedback to be published in Q3 prior to a formal consultation paper describing the resulting proposed rule changes.
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